For both married and unmarried couples, planning for the future is important. Circumstances will change and events will transpire; and, when they do, couples that have planned ahead will be more likely to navigate a successful outcome.
From a legal perspective, planning ahead means entering into a prenuptial or postnuptial agreement. Indiana law recognizes the validity and enforceability of both types of agreements, with the only significant difference being whether the agreement is signed prior to or during the marriage. In addition, although entering into a prenuptial or postnuptial agreement involves much more than simply planning for the possibility of divorce, it is worth noting up front that these agreements can override Indiana’s default “marital pot” rule as well, and this can be of significant benefit for both spouses.
So, what topics can (and should) you address in your prenuptial or postnuptial agreement? Every couple’s circumstances are unique, and preparing a prenuptial or postnuptial agreement is a deeply personal exercise that requires careful consideration of the unique aspects of your personal finances, family history, and relationship with your fiancé or spouse. Generally speaking, the types of provisions that couples can include in their prenuptial and postnuptial agreements include the following:
Under Indiana’s “marital pot” rule, any assets owned by either spouse are deemed to be jointly owned by both spouses. Unlike other states, in Indiana, this is true for assets acquired prior to and during the marriage. As a result, if one spouse or both spouses is bringing substantial wealth into the marriage, entering into a prenuptial or postnuptial agreement can help ensure that these “separate” assets receive the spouses’ desired treatment at the time of death (or divorce).
While this can serve a variety of different interests, it can be particularly important for spouses with children from prior relationships. With Indiana’s marital pot rule, an estate plan can only do so much to protect family heirlooms, accumulated wealth and other prized possessions. With a prenuptial or postnuptial agreement in place, both spouses can be confident that their estate plans will be enforced and administered as intended.
Prenuptial and postnuptial agreements can be used to confirm and establish liability for pre-existing and newly-incurred debts as well. While there are some restrictions here – a prenuptial or postnuptial agreement generally will not override spouses’ shared liability for a jointly-incurred debt – there are a number of reasons why spouses may want to formally address their obligations to creditors. For example, both spouses may wish to establish a payment plan for reducing or eliminating one spouse’s (or both spouses’) credit card debt. Or, spouses may wish to agree that one will assist with paying off the other’s school loans, or that they will jointly take on educational loans if one spouse wishes to go back to school in the future.
When two individuals have divergent spending and savings habits, entering into a prenuptial or postnuptial agreement can be an effective way to manage family finances without facing ongoing stress and disagreements. Fiancés and spouses can include provisions in their prenuptial and postnuptial agreements that address topics such as:
Entering into a prenuptial or postnuptial agreement can serve tax planning functions as well. Will you and your spouse file jointly or individually? What deductions will you claim? What steps will you each take in order to help minimize your overall federal and state income tax liability?
Disagreements during marriage are common, and they can even be healthy if managed constructively. But, what will you do if you and your spouse reach an impasse? Even if you do not foresee any major disagreements based upon your current relationship, it can still be worthwhile to put in place a plan for addressing significant disagreements if and when they arise. The options for resolving differences among married couples are almost endless, and range from setting aside time to speak without hostility to committing to mediation or couples’ counseling.
If you or your fiancé or spouse owns a business, entering into a prenuptial or postnuptial agreement can help ensure continuity and control while avoiding questions of involvement and ownership down the line. Dealing with a privately-held business in a divorce can be a complicated process; and, even if you have no plans to get divorced currently, going through the exercise of addressing ownership and control can be beneficial for your marriage in addition to serving to protect your company should your marriage come to an end.
If you and your fiancé or spouse both work, what will you do with regard to raising your children? Will one of you stay home? Will you hire a nanny or au pair? Regardless, how will you divide childrearing responsibilities when each of you are available to spend time with your children? These are difficult questions, and many couples put off answering them for too long.
If one spouse will forego career opportunities in order to raise your children, it can be beneficial to address this spouse’s return to work as well. When is the right time? How will your childrearing responsibilities change when the time comes? Will you jointly pay for any necessary re-training, licensing or education? Will you consider relocating so that he or she can pursue a new career opportunity?
Attorney Joshua R. Hains provides experienced and personalized legal representation for fiancés and spouses in Carmel, Indiana. If you have questions about prenuptial or postnuptial agreements, you can contact Hains Law, LLC for a free, no-obligation consultation. To speak with Joshua R. Hains in confidence, please call (317) 688-1305 or request an appointment online today.